Audit Sampling

Question 1

The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the

Answer 1

Effectiveness of the audit

Question 2

When performing a substantive test of a random sample of cash disbursements, an auditor is supplied with a photocopy of vendor invoices supporting the disbursements for one particular vendor, rather than the original invoices. The auditor is told that the vendor’s original invoices have been misplaced. What should the auditor do in response to this situation?

Answer 2

Reevaluate the risk of fraud and design alternate tests for the related transactions

Question 3

Which of the following statements about audit sampling risks is correct for a nonissuer?

Answer 3

Nonsampling risk can arise because an auditor failed to recognize misstatements

Question 4

The likelihood of assessing control risk too high is the risk that the sample selected to test controls

Answer 4

Does not support the auditor’s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment

Question 5

In planning a statistical sample for a test of controls, an auditor increased the expected population deviation rate from the prior year’s rate because of the results of the prior year’s tests of controls and the overall control environment.
The auditor most likely would then increase the planned

Answer 5

Sample Size

Question 6

The sample size of a test of controls varies inversely with

Answer 6

Tolerable rate

Question 7

To determine the sample size for a test of controls, an auditor should consider the tolerable deviation rate, the allowable risk of assessing control risk too low, and the

Answer 7

Expected deviation rate

Question 8

Which of the following factors is/are considered in determining the sample size for a test of controls?

Answer 8

Expected deviation rate ,Tolerable deviation rate and the allowable risk of assessing control risk too low

Question 9

For which of the following audit tests would a CPA most likely use attribute sampling?

Answer 9

Identifying entries posted to incorrect accounts

Question 10

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if

Answer 10

The population has highly variable recorded amounts

Question 11

Stratified mean per unit (MPU) sampling is a statistical technique that may be more efficient than unstratified MPU because it usually

Answer 11

Produces an estimate that has a desired level of precision with a smaller sample size

Question 12

When using classical variables sampling for estimation, an auditor normally evaluates the sampling results by calculating the possible error in either direction

Answer 12

Precision

Question 13

The use of the ratio estimation sampling technique is most effective when

Answer 13

The calculated audit amounts are approximately proportional to the client’s book amounts

Question 14

Which of the following is the primary objective of probability proportional to sample size

Answer 14

To identify overstatement errors

Question 15

Which of the following statements is correct concerning probability-proportional-to-size (PPS) sampling, also known as dollar unit sampling?

Answer 15

The auditor controls the risk of incorrect acceptance by specifying this risk level for the sampling plan